Idea Cellular Ltd to challenge Rs 600 crore government penalty notice

New Delhi – Idea Cellular Ltd , India’s third-biggest cellular carrier by revenue and users, said on Tuesday it had received a government notice asking for Rs 600 crore in penalties for allegedly violating rules when it acquired a smaller rival five years ago.

Idea is preparing to challenge the government order, it said in a filing to the stock exchanges.

In 2008, Idea agreed to buy smaller rival Spice Communications in a three-way deal that also gave Malaysia’s Axiata about a fifth of Idea. Idea currently runs Spice operations in two zones as part its own operations.

The telecommunications ministry has said Idea violated rules as it held permits in zones where Spice had operations. Rules then prohibited companies to own 10 per cent or more in a competing carrier in the same zone.

Idea has denied any wrongdoing and has said the merger was approved by courts. Shares in Idea, country’s second-biggest telecommunications carrier by market value, largely ignored the news and were trading about 0.4 per cent lower by 0453 GMT.